PROSPECTS AND CHALLENGES OF PLASTIC INDUSTRIES IN BANGLADESH. M. Serajul Islam Former Associate Professor of Chemical Engineering, BUET, Dhaka
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1 PROSPECTS AND CHALLENGES OF PLASTIC INDUSTRIES IN BANGLADESH M. Serajul Islam Former Associate Professor of Chemical Engineering, BUET, Dhaka ABSTRACT Plastic is an engineered material used to manufacture a wide variety of products to meet the domestic demand in Bangladesh as well as some products are exported. The plastic industry has emerged as an important industrial sector in the country during the last two decades. At present there are 3000 plastic manufacturing units, 98% of which belong to the Small-Medium Enterprises (SMEs). Domestic market size is Tk 7,000 crore. Per capita consumption of plastics in Bangladesh is 5 kg per year. The plastic sector constitutes 1.0 of GDP and provides employment for half a million people. Total export earning for both direct and deem (RMG accessories) exports is about US $ 337 million. An in-depth study of the plastic sector reveals multi-dimensional constraints and an excellent prospect for future growth. Major constraint in the plastic sector is the lack of an institutional arrangement dedicated to this sector, in order to provide supporting services such as skilled manpower, testing facilities for quality control, innovative technology and consultancy services. The availability of cheap labor and the fast developing plastic wastes recycling industry due to rising cost of petroleum (raw material of polymers) provide Bangladesh potential advantage of competitiveness in the global market. An expert (BUET, BCSIR, BITAC, BPGMEA) consultation meeting held on the plastic sector organized by the SME Foundation in 2008, has recommended setting up Bangladesh Institute of Plastic Engineering and Technology (BIPET). Aims and activities of this institute are given in this paper. This proposal is in the light of Indian experience. The entrepreneurs in the plastic sector have developed the plastic industries with their own initiative and finance. Now, considering huge potential of this sector and the multi-dimensional nature of the constraints, the government must provide supportive policy and institutional arrangements. 1.0 EMERGENCE OF PLASTIC INDUSTRIES The plastic industry in Bangladesh is relatively new compared with the textile and leather industries. The plastic industry began its journey as a small industry in e of the milestones of the development of plastic industries are listed in Table-1. witnessed rapid growth due to introduction of free market economy. 2.0 SALIENT FEATURES OF PLASTIC INDUSTRIES The plastic industry in Bangladesh uses imported polymer granules. During the period 1989 to 2007, the import of polymers increased from 10,000 tonnes to 289,000 tonnes per year. At present total consumption of polymers including imported polymers and recycled plastic wastes is 750,000 tonnes in FY This corresponds to the per capita consumption of plastics in Bangladesh 5 kg per year against the world average 30 kg. Per capita consumption in India and ASEAN countries are 8kg and 17kg respectively. seraj@che.buet.ac.bd Page 16 / 79
2 Table1: Milestones of Development of Plastic Industries in Bangladesh Year Technology and Products Small products such as toys, bangles and photo frame were made using hand made molds. Plastic spare parts for jute mills. Automatic machines were installed to manufacture household utensils such as plastic jugs and plate Film blowing machines to manufacture plastic bags 1991 Plastic accessories especially hangers for exportable garments Molded plastic chairs and tables. Water tank made by rotation molding. Locally developed machines (shredder, extruder, pelletizer) for recycling plastic wastes. At present plastic consumption is a measure of per capita GDP in a country, Figure 1. From this figure it can be seen that per capita consumption of plastics in Bangladesh lags behind China and India. Figure 1: Per capita polymer consumption vs. per capita GDP of selected countries (2009) (Ref. Chemical and Petro-chemical Association, India) There are about 3000 manufacturing units in the plastic sector of which 98% belongs to the Small and Medium Enterprises (SMEs). The plastic sector contributes 1.0 percent of GDP and provides employment for half a million people. Additional information on the plastic sector can be seen from Table-2. Table 2: Bangladesh Plastic Sector at a Glance Domestic Market Tk. 7,000 Crore (US $950 million) Per Capita About 5 kg/year Plastic Consumption Direct Export Tk. 500 Crore (US $ Earning 69 million) Deem Export: Tk Crore (US RMG $286 million) Accessories Manufacturing About 3,000 small, Units medium and large plastic manufacturing units operate across the country Recycling Sector There are 300 small units in Dhaka City which recycle about 138 tonnes/day Growth 20 percent per annum Employment during Half a million workers are employed in the sector Source: UN-ESCAP Report-2009 (Updated) Plastic Products: Some of the products for local consumption and export are given in Table-3. Applications of plastic products include Packaging, Healthcare/Pharmaceutical, Construction, Consumer Products, Agriculture and other Industrial uses. Page 17 / 79
3 Table 3: Plastic Products and its Applications in Bangladesh APPLICATIONS PRODUCTS Accessories for Packaging material, RMG bags, hanger etc. Household, Tableware & Bucket, jug, plate, glass, containers etc. Kitchenware Furniture ware Chair, Table etc. Packaging All kinds of food and non-food packaging Healthcare Toiletries (Soap case, tooth brush), Medical Accessories (blood bag, saline bag, injection, medicine container) Building and Plastic pipe, door, construction toilet flush etc. Electrical and Electrical cables and Electronic wires, switches, Equipment regulator, computer accessories, telecommunication Agricultural products Industrial Applications equipment etc. Plastic pipes for irrigation, and plastic films for shedding crops Engineering parts 3.0 PROSPECTS OF PLASTIC INDUSTRIES Shift of Manufacturing Industries: Manufacturing is a sun set industry in the west. Plastic consumption there is the highest on a per capita basis. A shift in manufacturing from the west to a region with low labor cost, high knowledge and technology base can be expected (Ambani- 1998). Bangladesh has a competitive advantage in the case of labor cost. Other qualities are to be acquired in order to be competitive in the international market. Export Earnings: Bangladesh is making an effort to diversify its expert items. Among the many items of export RMG, knitwear, frozen food, jute and leather constitute the major export of over 85% (Table- 4). Export of plastic goods in was about US $ 337 million. It includes both direct export and deem (RMG accessories) export. Table-5 indicates that the direct export of plastic goods has been on the increase every year. In the target is US $ 84 million. Raw Materials: There is no production of polymers in Bangladesh. The plastic industry uses imported raw materials of polymer granules. However, this not a disadvantage. Competitiveness: The availability of cheap labor and the fast developing recycling industry of postconsumer plastic wastes in Bangladesh are potential advantages to provide competitiveness in the global market (Katalyst-2005). Table 4: Sectorwise export earnings of Bangladesh in Sector Export in Million US $ Sectoral Share (%) RMG & Knitwear 12, Jute & Jute Goods Tea Leather & Footwear Frozen Foods Agricultural Products Engineering Products Plastic Goods Ceramic Products Others 1, Total export 16, Page 18 / 79
4 Table 5: Direct Export of Plastic Goods Financial Year Million US $ Growth Rate (%) (Target) 22.0 Average 20.2% Source: Export Promotion Bureau (Prothom Alo, October 15, 2011) Market Size Potential: If we look back, in 1990 the consumption of plastics in Bangladesh was 15,000 tonnes. It took 20 years to reach the 750,000 tonnes, an increase of 50 times. At present the per capita consumption of plastics in Bangladesh is 5 kg/year as compared to world average of 20 kg. Thus, there is a huge potential for the growth of plastic industry in the country. 4.0 CHALLENCES First and foremost challenge for the plastic industry in Bangladesh is to be competitive in the global market. Some of the large-scale plastic industries have demonstrated a capability to be world class in terms of technology, quality and costs. However, there are 3000 plastic manufacturing units of which 98% belong to the small-medium sector (SMEs). The major challenge facing this sector is to make the SMEs competitive in the global market by upgrading them in terms of innovative technology, products diversity and operation costs. It is to be emphasized that technology is changing rapidly and the life cycle is short. Recognizing this reality, the SME foundation organized a day-long Expert Development, Acquisition and Transfer in Plastic S sub-sectors on April 24, The meeting on plastic subsector was attended by experts from BUET, BCSIR, BITAC and BPGMEA (Bangladesh Plastic Goods Manufactures and Exporters Association). The author was the keynote speaker. The following paragraphs describe the constraints and recommendations. Constraints: Major constraints are the lack of institutional arrangement dedicated to the plastic sector. As a result there is no supporting service available for the following. Skilled manpower development Mold design mold making Testing facilities for quality control services Technical consultancy services Trouble shooting in operation of processing machine Proper management of plastic wastes Negative environmental image of plastic industries For an environmentally sustainable growth of the plastic sector the above mentioned constraints need government policy support and intervention by the SME Foundation. The Environmental issue related to the plastic industries is discussed briefly. Environmental Issue and Recycling of Plastic Wastes: Plastic products manufacturing is relatively environmentally sound. During manufacturing process the rejects and machine spares are usually recycled in the factory premises. Use of plastic chair, table and door save the forests with positive impact on the environment. Page 19 / 79
5 However, management of postconsumer plastic wastes is a challenging problem in every country. The plastic waste management of thin polyethylene (PE) bags has been a serious environmental problem in Bangladesh the littering of thin polyethylene bags had created such an unmanageable situation throughout the country that in April 2002 the parliament passed a bill banning the thin plastic bags. More than eight years has passed since the passing of the bill, the problem has not yet been fully solved. Lack of proper management of thin plastic bags is one of the reasons for the existing negative image of the plastic industry in the country. This affects export of plastic goods due to noncompliance of environmental standards by the plastic sector. The entrepreneurs in the plastic sector and the policy makers must create public awareness and provide alternative to plastic shopping bags. 5.0 RECOMMENDATIONS FOR CAPACITY BUILDING A critical analysis of issues and policy related to the plastic sector revealed that the absence of an institutional arrangement is the main obstacle to the technological capacity building for self-reliance. Major areas of promotional activities by the SME Foundation in short, medium and longterms should include the following. SHORT TERM Survey of plastic industries to create a data base Multi-instructional linkages (BCSIR, BUET, BITAC, BAEC) Upgradation of mold/die making MEDIUM TERM LONG TERM Quality control services Training of technical manpower Upgradation of technology in recycling factories Access to APCTT networking through the proposed NTTC Relocation of plastic recycling factories from old Dhaka to outside Dhaka Setup Bangladesh Institute of Plastic Engineering and Technology (BIPET) APCTT: Asian Pacific Centre for Transfer of Technology NTTC: National Technology Transfer Centre (Proposed) BITAC: The Plastic Division in BITAC was established with UN division lags well behind the current needs of plastic industries in Bangladesh. However, mold making experience of BITAC may be useful to upgrade this technology. The APCTT-NTTC linkage would be a first step towards technology transfer. This linkage has a limitation because the APCTT is a facilitating institution of the UN-ESCAP. It should be emphasized that each country has to acquire technological capability through its national institutional. In the long-term, therefore, it is proposed to set up a specialized plastic institute This will enhance the technological capability of the plastic sector to face the challenges of the highly competitive global Page 20 / 79
6 market. Aims and areas of activities of proposed institute are given below. 6.0 AIMS AND AREAS OF ACTIVITIES OF BIPET The aims of BIPET are to conduct research and develop system for optimal processing of polymers including plastic postconsumer wastes. The institution will act as a storehouse of information on technology transfer and provide training and consultancy services to the plastic industry. Areas of Activities: Academic affairs for manpower development and training Research & Development Mold/die manufacturing CAD Services Testing and Consultancy Services Technology Upgrading program Plastics and environment for sustainable development 7.0 CONCLUSSIONS The plastic sector has opened a new era of manufacturing plastic goods which have an excellent export potential. Since most of the plastic industries are in the small and medium categories, the SME Foundation extending due support to this sector can improve its competitiveness in the global market. The negative image of the plastic sector in Bangladesh can be changed through proper management of plastic wastes. Establishment of a Plastic Institute and strengthening of Plastic Foundation are appropriate institutional arrangements for sustainable development of the plastic industries. from the experts of different Institutions/Associations (BCSIR, BUET, BITAC and BPGMEA) during expert Development, Acquisition and Transfer in organized by the SME Foundation on April 24, REFERENCES 1. Ambani, M. (1998). A vision for the Indian Plastic Industry in the new millennium, Plastindia Foundation Meeting, Mumbai. 2. International Plastic Fair, Bangladesh Plastic Goods and Manufactures Association (BPGMEA), Dhaka. 3. ert Consultation Meeting on Technology Development, Acquisition and Transfer: Plastic Foundation, Bangladesh. 4. SME Foundation in Technological Capacity Building of Plastic r of International Plastic Fair, BPGMEA, Bangladesh. 5. Jahan, S.M. and Khan, M.S.N. Chain Competitiveness A strategic Analysis of the plastic Commissioned by UN-ESCAP. 6. Kapur, G. S. and Shashikant (2011), Indian Polymer Industry. 7. Karmoker, S. Towards Self-reliance in Plastic 8. KATALYST-Bangladesh (2005). Market Brief: PLASTICS. ACKNOWLEDGEMENT The author wishes to acknowledge with thanks the helpful suggestions received Page 21 / 79
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